Japan-based Toyota Motor Corporation (JP:7203) (TM) reportedly plans to boost its production in China. Reuters reported that the company aims to produce a minimum of 2.5 million vehicles per year in China by 2030. According to two sources, the company aims to grow its production to as high as 3 million vehicles annually by the end of the decade. This represents a 63% increase over the record 1.84 million vehicles Toyota produced in China in 2022.
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Toyota shares in Japan declined by 0.34% today.
Toyota Focuses on Growth in China
With this move, Toyota is focusing on achieving higher growth in China, where it is losing its market to Chinese rivals such as BYD Co. Limited (HK:1211). Last week, the company reported its Q3 results, highlighting weakness in key markets like North America and China. The company’s performance in China is mainly impacted by increased marketing expenses as it works to combat intense price competition from Chinese brands.
However, Toyota’s strategic move to expand in China contrasts with that of other global automakers that are either reducing their presence or exiting the Chinese market. The company’s Japanese rival, Mitsubishi Motors Corp, (JP:7211), has pulled out of China. Also, Toyota’s local competitor, Honda Motor (JP:7267), has opted to reduce its local production capacity.
Reuters further reported that Toyota has notified some suppliers of its planned production increase, aiming to secure its supply chain. Additionally, it is also looking to align its Chinese sales and production operations more closely with the higher involvement of local executives.
Is Toyota Stock a Buy or Sell?
On TipRanks, 7203 stock has received a Moderate Buy rating based on four Buy and three Hold recommendations. The Toyota share price target of ¥3,028.57 implies a growth rate of 13.75% in the share price.
